Income inequality, risk, and repugnance by Hauge, Kverndokk, and Lange

Two recent papers by  Karen Hauge, Snorre Kverndokk, and Andreas Lange report on the roles played by inequality and risk in causing repugnance to markets.

First, an experiment, motivated by a hypothetical market in kidneys (expressed in abstract terms), that finds that income inequality boosts repugnance to trade.

Hauge, Karen E., Snorre Kverndokk, and Andreas Lange. "Opposition to markets: Experimental evidence." Journal of Economic Behavior & Organization 227 (2024): 106743.

Abstract: We experimentally investigate reasons for opposing market institutions. The experiment shows that opposition to implementing market institutions varies by background characteristics and shows that distributional concerns are a reason for opposing trade institutions. We find no evidence that the opposition to trade is due to risk preferences or paternalistic motives. A main driver of the opposition to trade is the information about background conditions: veils of uncertainty increase the support for the trade institution.

"This paper reports experimental evidence to better understand potential opposition to market institutions, i.e. for allowing people to trade. For this, we abstract from repugnancy concerns that relate to the specific characteristics of the good or service in question, and rather reduces the setting to the payoff dimension and thus the involved risks and distributional concerns. While we use a neutral framing, organ trade, in particular, trade in kidneys, inspires the set-up of the experiment. Trading kidneys for payment is illegal worldwide, apart from in Iran.1 While it is obvious that persons with kidney issues would substantially benefit from a transplant, healthy donors expose themselves to risk (e.g., Lentine and Patel 2012). Currently, there is not a large income gap between donors and recipients in the US (Gill et al., 2012). Nevertheless, studies suggest that - at a given price - the poor would have larger incentives to donate and therefore, are more exposed to potential risks (Moniruzzaman, 2012; Parada-Contzen and Vásquez-Lavín, 2019) and thus potentially more vulnerable in terms of Satz (2010).2 To illustrate this in the experiment, we vary both the initial income of players (rich/poor) as well as their condition (healthy/sick) which combined affect their potential prospects with and without trade. 

...

"In our experiment, a share of 20 % of respondents across all treatments oppose the trade institution although it is constructed such that personal expected payoff is unaffected or improved. We find that the major reasons individuals vote against trade are the unfair distributions of gains from trade. Importantly, the opposition towards trade is partly self-serving: opposition is lower among those that benefit the most from implementing a market institution. Specifically, we find a significantly smaller opposition to trade institutions when participants are behind the veil of ignorance and do not know their income level, their (abstractly defined) health condition, and thus, how trade affects their payoff. Similarly, we find that distributing gains from trade more evenly, thus benefiting the poor to a larger extent, reduces opposition to trade among the poor."

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And here's a related survey study:

Hauge, Karen Evelyn, Snorre Kverndokk, and Andreas Lange. "On the opposition to market institutions on moral grounds." Humanities and Social Sciences Communications 11, no. 1 (2024): 1-8.

Abstract

"From a liberal viewpoint, voluntary trade appears to be something that should meet universal approval. If no one is obliged to trade, establishing a market institution could only make all better off. Nonetheless, specific market institutions meet substantial skepticism and criticism. This paper extends the extant literature by surveying the moral opposition towards trade in multiple dimensions and linking this to policy support measures. We provide survey results on moral opposition to trade in organs, sex services, surrogate mothers, trade in carbon permits, goods produced in poor countries, and food from countries where people suffer from hunger. These cover the potential reasons for opposing trade institutions: moral concerns, paternalism regarding risk-taking, and distributional concerns. Beyond this, we measure support for policies on unemployment benefits, risk prevention, equality goals within society, and redistribution. The survey of Amazon Mechanical Turk workers from the U.S. reveals significant moral opposition to trade in diverse dimensions. About a third of the participants strongly oppose trade in body items, sex services, and food imports from countries where a large proportion of the population suffers from hunger and malnutrition. Fewer participants strongly oppose trading CO2 permits, importing from developing countries, or allowing surrogate mothership. Besides other correlates (e.g., gender, education, being conservative), individuals’ attitudes towards imposing risks on others are identified as an important correlate of the opposition to trade for all the contexts of trade: those who are averse to exposing others to risk for their own advantage are more likely to oppose trading institutions. This measure of social preferences also relates to support for policies on risk prevention, equality goals within society, and redistribution. We discuss potential mechanisms behind this explanatory power of the newly identified measure."